Door slammed on Rochy plant: MG factory will stay closed if Saputo deal is completed

November 14, 2017

If Saputo buys out Murray Goulburn (MG), the Rochester plant will never open its doors again.

IT’S official.

If Saputo buys out Murray Goulburn (MG), the Rochester plant will never open its doors again.

While some jobs were saved at the Kiewa plant, Rochester was not so lucky.

The news comes after it was announced that the Kiewa plant would stay open to continue production on cream cheese. However all other areas of the plant would be shut down.

‘‘Due to a range of commercial considerations, the proposed closure of our Kiewa facility has been postponed,’’ general manager Craig McRae said in a release.

‘‘Cream cheese production will therefore continue at Kiewa, with current operational requirements maintained for at least the period until completion of the Saputo transaction.

‘‘Subject to completion, the continued operation of the Kiewa facility will be a matter for Saputo to consider.

‘‘In response to queries, I also would also like to clarify that the MG Trading business is included in the Saputo transaction, unless MG has sold MG Trading prior to completion, which it is entitled to do.

‘‘There is no formal sale process currently underway for MG Trading.

‘‘As with Kiewa, the future of MG Trading will be a matter for Saputo to consider subject to completion of the transaction.’’

Saputo chief executive Lionel Saputo Jnr said there were no plans to keep open the Kiewa factory or reopen Rochester if Saputo was successful in taking over MG next year, but he left the door ajar if milk was to return to the business.

“We trust the evaluation that the MG management has taken,” he said.

“Again, with 1.9 billion litres of milk there isn’t enough milk in the system to support those plants reopening.

‘‘Until such time we come back to a higher level of milk and need incremental capacity, I don’t think the plants will open up.”

Mr Saputo said there were opportunities to drive efficiencies and “shave some costs” in the MG business, pointing to “something as simple as lease and leases of space MG may have or perhaps some other expenses that may not be necessary”.

Chair of Rochester Open 4 Business group Leigh Wilson said it was imperative Saputo explored all its options with the factory and the community before making a decision.

“We are hoping we will have a discussion with Saputo in the future but if they don’t want the site, there are other enterprises who have expressed an interest and it is unacceptable for our community for it to sit their idle,” Mr Wilson said.

Ballendella dairy farmer and MG supplier Adam Campbell said he wasn’t happy the Australian co-op was being sold.

“I am disappointed a good company is now in ruins and is being sold off to foreign ownership — seven years ago under Stephen O’Rourke the co-op was in excellent condition and now it has been ruined,” Mr Campbell said.

He had only taken over the family farm in February and stayed with the fallen giant because he believed in the co-op structure.

“We were contracted and we could have gotten out of it, but I had the mentality the industry needed a co-op but what sort of co-op does what MG has, sell without any consultation with its suppliers, it might as well go.”

Mr Campbell said he will be attending the supplier meeting tomorrow but acknowledged there was not a lot of choice.

“I fear the deal is done and this is just a roadshow with a few pleasantries and that will be it.

“I am disgruntled, but I also understand moving forward we need a sustainable milk price and if Saputo are going to take over and pay that, we don’t have a lot of choice — someone is going to buy us out in the end.”

Mr Campbell said other milk processors seemed to be confidently investing in dairy including Fonterra with their plant at Stanhope and ACM with the new factory in Girgarre and he wondered how MG’s management could get it all so wrong, in such a short period of time.

“Saputo are obviously confident they can steer this ship out of the rough by taking on all of MG’s liabilities.”

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